Wholesale Pow er Supply Socorro Electric Cooperative, Inc. Rob - PowerPoint PPT Presentation

Wholesale Pow er Supply Socorro Electric Cooperative, Inc. Rob Wolaver, P.E. Senior Manager, Energy Resources

Outline  Tri-State Background  Tri-State Generation Mix  Power Delivery  Wholesale Electricity Markets 2

Tri-State Background  Founded in 1952. 65 th Anniversary Year  Not-for-profit, cooperative wholesale power supplier owned by the 43 distribution cooperatives it serves  Diverse: Residential, Industrial, Irrigation, Tourism  Serve >1.5 Million Customers (Rural & lower income)  Generation & Purchased Power Portfolio  4,000 MW including coal, gas, oil, wind, solar & hydro  Transmission: > 5,500 Miles of 115, 230 & 345 kV  Employees: 1,585

Tri-State 2016 Financial Data  Revenue: $1.4 Billion  Assets: $4.9 Billion  Liabilities: $3.8 Billion  Equity: $1.1 Billion

2016 Average Retail Rates 14 Source: FERC Form 1, Utility Annual Reports, and RUS Form 12 10 8 6 Cents / kWh 4 2 0 *Data for San Miguel Power Association is from 2015

2016 Tri-State Resource Mix 2016 Energy 2016 Capacity (%) As a % of Gross Member Sales Market Oil, <1% Purchases 12% Renewable 24% Coal Renewable 43% 27% Coal 50% Basin 12% Natural Natural Oil Gas Gas Basin 2% 19% 2% 9%

July 25, 2017 Resource Mix 7

Grow th of Tri-State and Member Renew able Generation (Excludes WAPA Hydropow er)

Grow th in Tri-State Wind and Solar Energy Generation (GWH/Yr) 1,800 1,600 1,400 1,200 1,000 800 600 400 200 0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Alta Luna Solar Project  25 MWac  Single-axis tracking  Northeast of Deming, NM  Completed January 2017  25 year PPA  Annual output will serve approx. 8,000 homes 10

Renew able Integration  Wind and solar need to be supplemented and “backed-up” with conventional hydro, coal and gas generation  Today, you cannot realistically replace coal 1:1 with intermittent renewables  Battery or other storage technology could change this situation

Coal Retirements & Renew ables  Three Announced Coal Unit Retirements  Employee and community transition  Cost  Incremental cost of baseload generation is cheaper than variable renewables  Accelerated depreciation

Tri-State Federal Hydropow er  Two Purchased Power Agreements  Colorado River Storage Projects  Glen Canyon, Blue Mesa, Flaming Gorge, Elephant Butte  Loveland Area Projects  Mount Elbert, Yellowtail, Flatiron, Guernsey, Seminoe  2016 Data  $82.4 Million Power Purchase Expense  Approximately 600 MW, 2,350 GWH/Yr  Served 15% of Tri-State Member Load

Renew able Generation Pricing Trends  Price of new renewable generation is heavily impacted by federal tax credits  “Utility-Scale” Projects  Transmission is a major issue for wind

Wholesale Pow er Delivery  Generation, Transmission, Metering, Billing  Necessary Contracts and Structures 15

Generation / Load Balance  Generation must balance customer load demand  Electricity cannot be stored at grid-level volumes  Power is scheduled  Deliveries are coordinated among generators, transmission providers and load-serving entities  24 x 7 Operation  Prepare for routine and upset conditions 16

Rules of the Road  Federal Energy Regulatory Commission (FERC)  North American Electric Reliability Council (NERC)  Western Electricity Coordinating Council (WECC)  New Mexico Public Regulation Commission (PRC)  Balancing Authority (Public Service Company of New Mexico)  National Electric Safety Code (NESC) 17

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Pow er Scheduling  24/7 Staffing  Technology  Software  Communications 19

Necessary Contracts and Structures  Power Supply  Power Purchase Agreement  Generation Ownership  Transmission  Network Integration Transmission Service Agreement (NITSA)  Ownership  Load Serving Entity  Cooperative, Municipal, Investor-Owned Utility 20

Pow er Purchase Agreements  Typical Terms and Conditions  Term and Termination  Price  Firmness  Credit Provisions / Security / Triggers  Point of Delivery / Point of Receipt  Load Forecasting  Metering  Dispute Resolution  Rollover / Extension  Default and Remedies 21

Transmission Service Contracts  Application for Service  Identify Load and Generators  Study Process to Establish Availability or Required Upgrades  Establish NITSA  Establish Network Operating Agreement  Ancillary Services  Voltage Support, Reserves, System Dispatch, Energy Imbalance, Regulation and Frequency Response 22

Natural Gas (Left Axis, Blue Line, $/MMBTU) Wholesale Electricity (Right Axis, Green Bars $/MWH) 23

Sample Economics of Alternate Supply Estimated Cost Service $/MWh Market Price of Block Power (PV ATC 2018-23) $30 Shaped Power + Ancillary Services $5 Upstream Transmission (El Paso $5 or PNM $7.50) $6 Tri-State Transmission $9 Socorro Distribution (?) $5 Supplier Margin $5 Estimated Delivered Cost To Socorro Meter $60

Distribution Functions Equipment Procurement, Warehousing, Spares Replacements Transformers Wire Meters Poles Line Crews – Training, Specialized Equipment Metering, Billing, Collections, Budgeting, Accounting Rate-Making, PRC Filings, Reporting Emergency Response Maintenance, Construction, Interconnections, ROW 25

Looking to the Future  Organized Markets  Southwest Power Pool (SPP)  California Independent System Operator (CALISO)  Distributed Generation  Energy Storage  Carbon Regulation